“Facebook? Nobody uses it, there is no point in downloading the application.” A young woman from Generation Z explains that now people are on TikTok and Instagram, that Facebook is for older people.
The largest social network in the world today celebrates its twenties with an aged image but enviable at its age. There is no company in the sector that has completed 20 years of being crowned as the planet’s leader. More than 3 billion people actively use it every month (TikTok has 1 billion). This figure is equivalent to more than a third of humanity, taking into account that 8 billion people inhabit the planet. In Spain, penetration is higher. According to data from the Gfk consulting firm, a total of 33 million people have an active account on the social network, which is equivalent to 68% of the population.
“The impact of Facebook is immeasurable. It has marked a before and after in the history of human communication and the Internet. The mark it has left could be compared to the arrival of television or the mobile phone,” says Enrique San Juan, a consultant specialized in innovation.
Like most digital businesses in the Western world, Facebook was born in the United States, specifically on the campus of Harvard University. Student Mark Elliot Zuckerberg came up with the idea with three roommates. Initially, the website was called Facemash and was designed to rate the physical appearance of students. The university banned the service for violating student privacy, but the popularity that students gained led them to rethink the service. This time, the website would be a university yearbook in digital format, as if it were a book of faces. From there came the name of the brand, which in English means “face and book.”
With this idea between his eyebrows, Zuckerberg changed Harvard for Silicon Valley, where he began to develop the business surrounded by the best talent. It was in 2004 when Facebook was born as such. It was not the first social network that existed on the market: Linkedin was founded in 2002 and MySpace, in 2003. But Facebook took off thanks to two key functions: the “newsfeed”, or content wall, which it introduced in 2006, and the famous “like” button, which it launched in 2009. Another transcendental aspect was the gear behind the platform, powered by a powerful algorithm “designed to make use as addictive as tobacco,” in the words of the former director of monetization Tim Kendall, who was subpoenaed by the US Congressional Consumer Protection Commission in 2020.
As is common in the beginnings of digital companies, the business did not generate income or profits. It added users but couldn’t find a way to make money. This changed in 2008, when the company hired Sheryl Sandberg, a former veteran Google executive who found the goose that laid the golden eggs: selling users’ personal data to companies so that they would pay to place ads. personalized according to your tastes.
With this business model, free for the user and paid for advertisers, the company has become one of the largest technology companies in the world. On Friday, the Meta group (it has been called that since 2021) announced the results for the 2023 financial year: record revenues of 134,902 million dollars (124,531 million euros), of which more than 95% came from advertising. The net profit was 39,098 million dollars, which is equivalent to 36,092 million euros. These large figures would not be understood without the weight that the group’s other businesses have today: Instagram and WhatsApp, acquired in 2012 and 2014, respectively. Over the last decade, the company has been able to take advantage of these operations, whose success has been greater than that of other proprietary applications such as Messenger or Threads.
More doubts are generated by the commitment to the metaverse, which has not yet borne fruit, since it was designed with a ten-year horizon. “It was a strategic error, a smokescreen that has been overshadowed by the rise of generative artificial intelligence,” says Professor Ferran Lalueza, specialized in Communication Sciences at the UOC.
However, the results for the 2023 financial year give hope to the future of the company, which has managed to redirect its commitment to the metaverse and prioritize investment in AI development. In this bid to convince investors again (see graph on the fall of shares in 2022), the company has not only announced investments in AI but has severely cut expenses. In fact, 2023 was baptized as “the year of efficiency” and that is why Meta was the protagonist of a new wave of layoffs, which began in 2022, and resulted in a total cut of 24% of the workforce.
Regarding the Facebook social network, the future perspective raises doubts. “Young people do not use it and in the long run it is doomed to disappear,” says Lalueza. On the other hand, the spokesperson for the IAB association, Daniel Devai, assures that “Facebook is and will continue to be relevant because it is present in developing countries.” The great example is India, which is the first country in number of users (315 million), far above the United States, Indonesia or Brazil, according to Statista data. In addition, Devai points out, Facebook remains an attractive platform for advertisers who want to captivate consumers 40 years of age and older.
Despite the good results for fiscal year 2023, Meta celebrates its twentieth anniversary facing a new reputational crisis. This week, Zuckerberg appeared before the United States Senate to respond to accusations about Facebook’s impact on the mental health of minors. And it is not only the parents who shout to the heavens. Former company executives have warned of the excesses of the social network when it comes to obtaining user data. “Facebook has put its economic interests ahead of maintaining a positive role in society,” said Sandy Parakilas, former COO of Facebook in 2017. Then the Cambridge Analytica scandal had already broken out, a British company that stole huge amounts of data from Facebook users to influence politics, especially in the North American elections in which Donald Trump emerged victorious.
Security breaches and accusations of promoting hate speech to captivate users’ time have been recurring on Facebook. Not only in the United States. In the European Union, the multinational has been under judicial investigation for years for violating data privacy policies. In fact, in May it was sanctioned with a record fine of 1.2 billion euros by the Irish data protection authority at the request of the EU. In the resolution, Meta also has the obligation to stop transferring the data of European users to the US. In addition, the European Commission is investigating the multinational for abuse of a dominant position with its second-hand goods buying and selling platform.
Despite successive reputation crises, the brand value has remained among the highest in the world. According to the consulting firm Brand Finance, which analyzes different parameters to assess the prestige of brands, Meta has started the year in eighth position in the world, compared to 14th last year. The cutting of expenses and the commitment to AI have pushed the company up the ranking, which has not recovered historical highs and is still far from its colleagues Apple, Amazon, Google or Microsoft, which are in the top 5. The consulting firm alerts Facebook that at 20 years old, the Asian giant TikTok is beginning to overshadow it.
